MONEY and magic have a long history of working together.
Many of us experience money’s disappearing act regularly as our spare cash seemingly vanishes into thin air before our next pay packet arrives, only for that to vanish quickly too.
Money also seems to have magical powers that make people do bad things — lie, steal, kill, be greedy, be jealous, buy remote control tarantulas … it’s a long list.
However, people can do positive magic with money too. These six tricks might dazzle you.
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READ NOW1. DISAPPEARING ACT ONE
Turn the tables on money’s disappearing act by setting up a separate savings or investment account and having your wage or regular direct debts going into it every week.
This will help grow the money before it gets a chance to evaporate, because most people don’t spend what they don’t see.
2. DISAPPEARING ACT TWO
Debt is dangerous because it can spiral out of control quickly, but can be controlled with good strategies and willpower.
Hide credit cards if you’re too tempted to spend, pay off the highest interest rate debt first to save money, consider consolidating debt into a low-rate card or mortgage, and make extra repayments so debt vanishes faster.
FRUSTRATIONS: Harden up to first-world money problems
3. COMPOUND AND ASTOUND
Compound interest — the process of earning interest on your interest on your interest, and so on — is the closest thing to real magic you’ll see.
It works best over years or decades, and is a driving force for successful investors everywhere. Every $1000 deposited today balloons to more than $16,000 over 40 years, based on a growth rate of 7 per cent.
Compound interest will make your superannuation or other investments multiply, just like rabbits, which also are popular with magicians.
4. SUPER SECRETS
Want to pay zero tax on all your income and profits during retirement? Use superannuation.
Want a 50 per cent return on your deposit? Consider the $500 government super co-contribution if you earn below $52,000 a year.
Want to stop the government taking so much tax out of your salary? Think about salary sacrifice into super. Talk to your fund or an adviser about using the rules to your advantage.
5. TAX TRICKS
Australia’s tax rules are complex and confusing, and you don’t have to break them to work some money magic.
Taxpayers miss out on mountains of money each year by failing to claim the deductions they are legally allowed. Phones, cars, clothes, computers, home office furniture, income protection insurance, books and journals, asset depreciation, donations and even sunscreen are among deductions you may be eligible to claim.
6. A PRICE ON SMILES
Magicians make people smile, and you can too if you’re generous with money.
The festive season is a great motivation for giving, and donations are usually tax-deductible.
RSM Australia’s principal of tax services, Corey Beat, says charitable donations can reduce your taxable income to potentially put you below key income thresholds for things including HECS/HELP debts, excess super contributions tax, private health insurance and family tax benefits.
“In some cases, a relatively small donation can mean thousands saved in tax,” he says.